Education Trusts for grandchildren

Education trusts will replace accumulation and maintenance trusts. As A and M trusts are no longer available what IHT-efficient arrangements are available to those who want to make provision for grandchildren now?

Table of contents

Education Trusts for grandchildren

Education trusts for grandchildren

Education trusts will replace  accumulation and maintenance trusts. As A and M trusts are no longer available what IHT-efficient arrangements are available to those who want to make provision for grandchildren now?A controlled access trust is designed as an alternative to the old A&M trust and can form part of an estate planning solution. Some may not be familiar with how this type of trust works.Like an A&M trust, grandparents may decide, as part of an estate planning and school fees exercise, to gift money for the benefit of a grandchild. However, not only are they seeking IHT-efficiency, but they also want to make sure that there is a control over how and when the grandchild can benefit.At outset, the grandparents will create a bare trust and gift a lump sum to the trustees for them to invest. This is a potentially exempt transfer for IHT purposes and therefore any chargeable gains within the trust are chargeable on the beneficiaries.The trust is structured so it has two beneficiaries; the named grandchild, who must be under the age of 18, will be entitled to 99% of the benefits and an adult beneficiary (perhaps the 99% beneficiary’s parent) will be entitled to the remaining 1%. Under the rules of the trust, the trustees cannot change the beneficiaries or the split of benefits each beneficiary will receive.The trustees then invest the lump sum across a series of policies with defined maturity dates and no surrender option. These policies can be structured in such a way as to provide the trustees with periodic lump sums which can be used for expenditure, such as school fees.As the initial gift is made into a bare trust, there is no IHT payable on entry, whatever the size of the investment, and no 10-year anniversary periodic charges. It is treated as a potentially exempt transfer and is therefore outside of the donor’s estate after seven years. If the original gift is in excess of the nil rate band and death occurs within seven years then taper relief may apply to reduce any IHT payable.Unlike other bare trust arrangements, the controlled access trust allows the benefits to be held back until after the grandchild’s 18th birthday.

Join our Newsletter

Subscribe and get the latest updates about inheritance tax and Estate Planning into your mailbox.

We help people with over £1 million in current assets pay ZERO in UK inheritance tax

One stop comprehensive specialist advice - Tax, financial planning and legal advice service with 18 years experience.

What our clients say
Read our 148
    
reviews

"It is gratifying to finally come across an adviser who gives sensible ongoing advice which is very client focused."

Frank Hibberd

Retired gentleman

"It is nice to know that we can now be certain that our daughter will inherit our money without giving a large slice of it to the government ."

Tony & Sue Perriss

"Everyone's situation is different but having an initial discussion with Charles has really helped me personally navigate what can be a daunting subject."

Bobby Chadda

"I particularly want to thank you for the open and transparent manner in which you have serviced my tax planning needs since I first met you seven or so years ago. In arranging my tax planning through you, I have confidence"

Michael Mahon

Retired gentleman

"Charles was really helpful from the outset and quickly clarified our situation for us... I have used Bluebond for  IHT and other tax advice and they have been very helpful with both. Charles is a very experienced and knowledgeable individual and I highly recommend Bluebond's services."

Sam Attenborough

Retired gentleman

I have used Bluebond for setting up a discretionary trust for my children as well as inheritance tax and estate planning for my home and  other properties. Having searched for years, it was only after meeting and speaking with Charles that I felt confident enough to take these next steps, and I'm very glad I did. His ability to explain complex issues in simple terms and walk you through every step of the process is quite simply unparalleled.

Imran Qureshi

Excellent and comprehensive advice concerning all things financial in one place. Enthusiastic, Educational, Expert, value oriented, Professional and Polite are adjectives that come to mind as well as great attention to detail.

Deirdre Buckley

Inheritance tax is a minefield. Charles de Lastic of Bluebond Tax Planning is the best in the business at helping you to chart the path that is right for you to ensure your estate is structured in the most tax efficient manner.

Nicholas Dickinson

Charles provides clients with valuable insights that clearly demonstrate expertise built over the years. Charles and his team guided us through a estate planning journey and then addressing complex Inheritance Tax matters. They have been very transparent with their advice and cost. Overall an excellent service. Highly recommended

Shailesh Karia

The information contained in this web site is for UK consumers only.  Like most firms of solicitors and accountants, Bluebond Tax Planning is not regulated by the FCA. The content of this website does not constitute FCA regulated financial advice and all content is provided for general information purposes only. Bluebond is not responsible for any action you may take as a result of information on this site. All advice will be delivered on a personal basis once we fully understand your situation and our client agreements have been signed.

Copyright © 2024 Bluebond.co.uk
-
Copyright Notice
-
Legal Disclaimer
-
Terms & Conditions
-
Privacy Policy